Verizon Ends Phone Subsidies, Contracts; Introduces New Monthly Data Plans

Verizon Ends Phone Subsidies, Contracts; Introduces New Monthly Data Plans
My Verizon iPhone Robert Scoble / Flickr CC BY 2.0

Verizon has decided to end its phone subsidies and contracts for new customers. Beginning this month, the revamped system will allow users to pay for the data they want and pay a monthly fee.


Four New Data Plans

Following the change, Verizon has rolled out four new packs that offer progressively varying amounts of data.

Small data pack: 1GB of data for $30 a month

Medium data pack: 3GB of data for $45 a month

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Large data pack: 6GB of data for $60 a month

X-large data pack: 12GB of data for $80 a month.

Each data plan includes unlimited voice and text messages.

The data can also be shared among devices. Adding a mobile hotspot or tablet to the plan will cost $10 a month; “connected devices” like smartwatches at $5 a month; and smartphones at $20 for each device.

According to Re/Code, users will have to pay $15 per GB once they exceed the allotted data quota as per their plan.

The new system will also allow users to switch between different plans.

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“There’s a lot going on in the market,” said Rob Miller, vice president of pricing and promotion.

“We felt like this should not be a tough decision,” Miller said, as reported by CNET.

Customers who are looking to purchase a new phone have the choice to either go for Verizon’s device payment option plan or pay the entire amount upfront.

According to The Market Business, a 6GB plan at present is priced at $70, while the access fee for a contract plan is $40. Paying upfront for the device will cost customers $200 as compared to the full price of $650.

Current users will also be able to switch to the new plans “with some restrictions,” Verizon said.

The Flip Side

Walt Piecyk, an analyst at BTIG Research, emphasizes that the wireless service provider’s focus on only its four data plans may not be satisfactory for heavy users.

“It’s odd that Verizon’s largest shared data plan would top out at 12 GB leaving potential high usage customers to wonder if they would get jammed with big overage charges if they switched to these,” he said.

Additionally, the company also removed its 500MB plan, which was priced at $20.

The new plans come into effect on August 13.

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